Results
Astera Labs Inc
11/05/2025 | Press release | Distributed by Public on 11/05/2025 05:00
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with theunaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto and management's discussion and analysis of financial condition and results of operations for the year ended December 31, 2024 included in our Annual Report on Form 10-K filed with the SEC on February 14, 2025. As discussed in the section titled "Special Note about Forward-Looking Statements," this discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section titled "Risk Factors" and included elsewhere in this Quarterly Report on Form 10-Q and Annual Report on Form 10-K filed with the SEC on February 14, 2025.
Overview
Our mission is to innovate, design, and deliver semiconductor-based connectivity solutions that are purpose-built to unleash the full potential of cloud and AI infrastructure.
Building on years of experience with a singular focus on addressing connectivity challenges in data-centric systems, we have developed and deployed our Intelligent Connectivity Platform built from the ground up for cloud and AI infrastructure. Our Intelligent Connectivity Platform is comprised of semiconductor-based, high-speed, mixed-signal connectivity products that integrate a matrix of microcontrollers and sensors, and COSMOS, our software suite, which is embedded in our connectivity products and integrated into our customers' systems.
Our Intelligent Connectivity Platform provides our customers with the ability to deploy and operate high-performance cloud and AI infrastructure at scale, addressing an increasingly diverse set of requirements. We provide our connectivity products in various form factors, including Integrated Circuits ("ICs"), boards, and modules.
Our patented software-defined platform approach delivers critical connectivity performance, enables flexibility and customization, and supports observability and predictive analytics. This approachis designed to efficiently address the data, network, and memory bottlenecks, scalability, and other unique infrastructure requirements of our hyperscaler and system OEM customers.
Based on trusted relationships with the leading hyperscalers and collaboration with data center infrastructure suppliers, our platform is designed to meet our customers' unique cloud scale requirements. Our COSMOS software suite is foundational to our Intelligent Connectivity Platform and is designed to enable our customers to seamlessly configure, manage, monitor, optimize, troubleshoot, and customize functions in our IC, board, and module products.
Today, our connectivity solutions are at the heart of major AI platforms deployed worldwide featuring both commercially available Graphic Processing Units ("GPUs") and proprietary AI accelerators.We offer our customers four product families across multiple form factors including ICs, boards, and modules. Our products, which include Aries PCIe®/CXL® Smart DSP Retimers, Aries PCIe®/CXL® Smart Cable Modules™, Taurus Ethernet Smart Cable Modules™, Leo CXL Memory Connectivity Controllers, and Scorpio Smart Fabric Switches, are built upon industry standard connectivity protocols such as Peripheral Component Interconnect Express ("PCIe"), Ethernet, and Compute Express Link ("CXL"), to address the growing demand for purpose-built connectivity solutions that solve critical data, network, and memory bottlenecks inherent in cloud and AI infrastructure.
Since our inception, we have created and commercialized first-to-market PCIe, Ethernet, and CXL products. We have become a trusted partner and a proven supplier to our hyperscaler and system OEM customers. We have experienced strong growth since the commercial launch of Aries in 2020. Our revenue grew from $34.8 million in 2021, $79.9 million in 2022,and $115.8 million in 2023 to $396.3 million in 2024. Our revenue was $581.9 million for the nine months ended September 30, 2025, driven by a sizable increase in demand for our products. We have made significant investments in the design and development of new products and platform enhancements. Although we have recently recorded quarterly net income, we have not yet achieved profitability on an annual basis.
Summary of Financial Highlights
Our revenue for the three and nine months ended September 30, 2025 increased by 104% and 128%, respectively, compared to the same periods in 2024. The increase for both periods was primarily due to an increase in overall unit shipments driven by higher demand for our Aries, Scorpio, and Taurus products, as well as higher overall average selling prices resulting from an increased mix of hardware modules and Scorpio products.
Gross margin decreased by 150 basis points ("bps") and 200 bps to 76.2% and 75.7% for thethree and nine months ended September 30, 2025, respectively, compared to 77.7%and 77.7%, respectively, for the same periods in 2024. The decrease for both periods was primarily driven by product mix as we shipped more hardware modules.
Operating expenses increased by $23.6 million, or 24%, for the three months ended September 30, 2025, compared to the same period in 2024. The increase was primarily driven by a $23.7million increase in headcount related expenses resulting from a 79% increase in headcount, a $2.2 million increase in other operating costs to support our business expansion, and a $1.4 million increase in expenses related to our research and development ("R&D") initiatives. These increases were partially offset by a $5.1 million decrease in non-cash stock-based compensation expense.
Operating expenses increased by $19.9 million, or 6%, for the nine months ended September 30, 2025, compared to the same period in 2024. The increase wasprimarily driven by a $59.7 million increase in headcount related expenses resulting from a 77% increase in headcount, a $13.1 million increase in expenses related to our R&D initiatives, an $8.0 million increase in other operating costs to support our business expansion primarily relating to our new headquarters relocation, a $3.3 million increase in professional services fees, and a $1.6 million increase in depreciation and amortization expenses. The increase was partially offset by a $67.7 million decrease in non-cash stock-based compensation expense, which resulted primarily from the recognition of time-based vesting of RSUs following the satisfaction of the liquidity event vesting condition in connection with our initial public offering ("IPO") in the prior period.
Results of Operations
Comparison of the Three and Nine Months Ended September 30, 2025 and 2024
Revenue
|
Three Months Ended September 30, |
Change |
Nine Months Ended September 30, |
Change | ||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Amount | % | 2025 | 2024 | Amount | % | ||||||||||||||||||||||||||||||||||||||||
|
(in thousands, except percentages)
|
|||||||||||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 230,575 | $ | 113,086 | $ | 117,489 | 104 | % | $ | 581,942 | $ | 255,194 | $ | 326,748 | 128 | % | |||||||||||||||||||||||||||||||
Total revenue increased $117.5 million, or 104%,and $326.7 million, or 128%, for the threeand nine months ended September 30, 2025, respectively, compared to the same periods in 2024. The increase was primarily due to an increase in overall unit shipments driven by higher demand for our Aries, Scorpio, and Taurus products, as well as higher overall average selling prices resulting from an increased mix of hardware modules and Scorpio products.
Cost of Revenue, Gross Profit, and Gross Margin
|
Three Months Ended September 30, |
Change |
Nine Months Ended September 30, |
Change | ||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Amount | % | 2025 | 2024 | Amount | % | ||||||||||||||||||||||||||||||||||||||||
|
(in thousands, except percentages and bps)
|
|||||||||||||||||||||||||||||||||||||||||||||||
| Cost of revenue | $ | 54,763 | $ | 25,209 | $ | 29,554 | 117 | % | $ | 141,156 | $ | 56,943 | $ | 84,213 | 148 | % | |||||||||||||||||||||||||||||||
| Gross profit | 175,812 | 87,877 | 87,935 | 100 | % | 440,786 | 198,251 | 242,535 | 122 | % | |||||||||||||||||||||||||||||||||||||
| Gross margin | 76.2 | % | 77.7 | % |
(150) bps
|
75.7 | % | 77.7 | % | (200) bps | |||||||||||||||||||||||||||||||||||||
Total cost of revenue increased $29.6 million, or 117%,and $84.2 million, or 148%, for thethree and nine months ended September 30, 2025, respectively, compared to the same periods in 2024. The increase was primarily due to higher overall unit shipments and a shift in product mix, resulting from an increased mix of hardware modules and Scorpio products.
Gross margin decreased 150 bps to 76.2% for thethree months ended September 30, 2025 compared to 77.7% for the same period in 2024. Gross margin decreased 200 bps to 75.7% for thenine months ended September 30, 2025 compared to 77.7% for the same period in 2024. The decrease for both periods was primarily driven by product mix as we shipped more hardware modules.
Research and Development
|
Three Months Ended September 30, |
Change |
Nine Months Ended September 30, |
Change | ||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Amount | % | 2025 | 2024 | Amount | % | ||||||||||||||||||||||||||||||||||||||||
|
(in thousands, except percentages)
|
|||||||||||||||||||||||||||||||||||||||||||||||
|
Research and development
|
$ | 78,928 | $ | 50,659 | $ | 28,269 | 56 | % | $ | 210,206 | $ | 144,306 | $ | 65,900 | 46 | % | |||||||||||||||||||||||||||||||
|
Percentage of revenue
|
34 | % | 45 | % | 36 | % | 57 | % | |||||||||||||||||||||||||||||||||||||||
Research and development expense increased $28.3 million, or 56%, for thethree months ended September 30, 2025, compared to the same period in 2024. The increasewas primarily due to a $25.8 million increase in personnel-related costs including $7.1 million of non-cash stock-based compensation expenses resulting from a 104% increase in headcount.
Research and development expense increased $65.9 million, or 46%, for thenine months ended September 30, 2025, compared to the same period in 2024. The increasewas primarily due to a $46.1 million increase in personnel-related costs including $1.1 million of non-cash stock-based compensation expenses resulting froma 99% increase in headcount, a $12.1 million increase in overall spending to support our R&D initiatives, and a $4.4 million increase in other operating costs to support our business expansion.
Sales and Marketing
|
Three Months Ended September 30, |
Change |
Nine Months Ended September 30, |
Change | ||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Amount | % | 2025 | 2024 | Amount | % | ||||||||||||||||||||||||||||||||||||||||
|
(in thousands, except percentages)
|
|||||||||||||||||||||||||||||||||||||||||||||||
|
Sales and marketing
|
$ | 19,359 | $ | 23,248 | $ | (3,889) | (17) | % | $ | 59,670 | $ | 100,834 | $ | (41,164) | (41) | % | |||||||||||||||||||||||||||||||
|
Percentage of revenue
|
8 | % | 21 | % | 10 | % | 40 | % | |||||||||||||||||||||||||||||||||||||||
Sales and marketing expense decreased $3.9 million, or 17%, for thethree months ended September 30, 2025, compared to thesame period in 2024. The decrease was primarily due to a $6.8 milliondecrease in non-cash stock-based compensation expense, which resulted primarily from the recognition of time-based vesting of RSUs granted prior to our IPO. The decrease was partially offset by a $2.6 million increase in personnel-related expensesresulting from a 25% increase in headcount.
Sales and marketing expense decreased $41.2 million, or 41%, for thenine months ended September 30, 2025, compared to the same period in 2024. The decrease was primarily due to a $50.3 milliondecrease in non-cash stock-based compensation expense, which resulted primarily from the recognition of time-based vesting of RSUs following the satisfaction of the liquidity event vesting condition in connection with our IPO in the prior period. The decrease was partially offset by a $7.5 million increase in personnel-related expenses resulting from a 25% increase in headcount.
General and Administrative
|
Three Months Ended September 30, |
Change |
Nine Months Ended September 30, |
Change | ||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Amount | % | 2025 | 2024 | Amount | % | ||||||||||||||||||||||||||||||||||||||||
|
(in thousands, except percentages)
|
|||||||||||||||||||||||||||||||||||||||||||||||
|
General and administrative
|
$ | 22,119 | $ | 22,866 | $ | (747) | (3) | % | $ | 64,445 | $ | 69,321 | $ | (4,876) | (7) | % | |||||||||||||||||||||||||||||||
|
Percentage of revenue
|
10 | % | 20 | % | 11 | % | 27 | % | |||||||||||||||||||||||||||||||||||||||
General and administrative expense decreased $0.7 million, or 3%, for thethree months ended September 30, 2025, compared to the same period in 2024. Thedecrease was primarily due toa $5.3 million decrease in non-cash stock-based compensation expense, which resulted primarily from the recognition of time-based vesting of RSUs granted prior to our IPO. The decrease was partially offset by a $2.4 million increase in personnel-related expensesresulting from a 43% increase in headcount, a $1.2 million increase in professional services fees associated with the continued development of our public company infrastructure, and a $0.7 million increase in other operating costs to support our business expansion.
General and administrative expense decreased $4.9 million, or 7%, for thenine months ended September 30, 2025, compared to the same period in 2024. Thedecrease was primarily due toa $18.5 million decrease in non-cash stock-based compensation expense, which resulted primarily from the recognition of time-based vesting of RSUs following the satisfaction of the liquidity event vesting condition in connection with our IPO in the prior period. The decrease was partially offset by a $7.3 million increase in personnel-related expensesresulting from a 55% increase in headcount, a $3.4 million increase in other operating costs to support our business expansion primarily related to our new headquarters relocation, and a $2.3 million increase in professional services fees associated with the continued development of our public company infrastructure.
Interest Income
|
Three Months Ended September 30, |
Change |
Nine Months Ended September 30, |
Change | ||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Amount | % | 2025 | 2024 | Amount | % | ||||||||||||||||||||||||||||||||||||||||
|
(in thousands, except percentages)
|
|||||||||||||||||||||||||||||||||||||||||||||||
|
Interest income
|
$ | 11,456 | $ | 10,912 | $ | 544 | 5 | % | $ | 32,773 | $ | 23,730 | $ | 9,043 | 38 | % | |||||||||||||||||||||||||||||||
For the three months ended September 30, 2025, interest income increased $0.5 million, or 5%, compared to the same period in 2024. The increase was primarily due tohigher average balances of short-term investments and cash equivalents as a result of cash flow from operations.
For thenine months ended September 30, 2025, interest income increased $9.0 million,or 38%, compared to the same period in 2024. The increase was primarily due tohigher average balances of short-term investments and cash equivalents as a result of our IPO in the prior period and cash flow from operations.
Income Tax (Benefit) Provision
|
Three Months Ended September 30, |
Change |
Nine Months Ended September 30, |
Change | ||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Amount | % | 2025 | 2024 | Amount | % | ||||||||||||||||||||||||||||||||||||||||
|
(in thousands, except percentages)
|
|||||||||||||||||||||||||||||||||||||||||||||||
|
Income tax (benefit) provision
|
$ | (24,252) | $ | 9,609 | $ | (33,861) | (352) | % | $ | (34,914) | $ | 15,654 | $ | (50,568) | (323) | % | |||||||||||||||||||||||||||||||
The benefit from income tax increased $33.9 million, or 352%, for thethree months ended September 30, 2025, compared to the same period in 2024,primarily due to excess tax benefits related to equity compensation. The increase was partially offset by the decreased foreign-derived intangible income deduction and U.S. research and development credits from indirect effects of the One Big Beautiful Bill Act ("OBBBA"), which was signed into law by the President on July 4, 2025.
The benefit from income tax increased $50.6 million, or 323%, for the nine monthsended September 30, 2025, compared to the same period in 2024,primarily due to excess tax benefits related to equity compensation. The increase was partially offset by the decreased foreign-derived intangible income deduction and U.S. research and development credits from indirect effects of the OBBBA.
Non-GAAP Financial Measures
This Quarterly Report on Form 10-Q contains certain financial measures that are not presented in accordance with generally accepted accounting principles in the United States ("GAAP"), which we use to supplement the performance measures in our condensed consolidated financial statements, which are presented in accordance with GAAP. We refer to these measures as "non-GAAP financial measures." These non-GAAP financial measures include non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income, and non-GAAP net income. We use these non-GAAP financial measures for financial and operational decision-making and as a means to assist us in evaluating period-to-period comparisons. By excluding certain items that may not be indicative of our recurring core operating results, we believe that non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income, and non-GAAP net income provide meaningful supplemental information regarding our performance. Accordingly, we believe these non-GAAP financial measures are useful to investors and others because they allow for additional information with respect to financial measures used by management in its financial and operational decision-making and they may be used by our institutional investors and the analyst community to help them analyze the health of our business. However, there are a number of limitations related to the use of non-GAAP financial measures, and these non-GAAP measures should be considered in addition to, not as a substitute for or in isolation from, our financial results prepared in accordance with GAAP. Other companies, including companies in our industry, may calculate these non-GAAP financial measures differently or not at all, which reduces their usefulness as comparative measures.
Non-GAAPGross Profit and Non-GAAP Gross Margin
We define non-GAAP gross profit as gross profit presented in accordance with GAAP, adjusted to exclude stock-based compensation expenses.The non-GAAP gross margin is non-GAAP gross profit divided by revenue. We have presented non-GAAP gross profit because we consider non-GAAP gross profit to be a useful metric for investors and other users of our financial information in evaluating our operating performanceas it excludes the impact of stock-based compensation,a charge that can vary from period to period for reasons that are unrelated to our core operating performance. This metric also provides investors and other users of our financial information with an additional tool to eliminate the effects of items that may vary for different companies for reasons unrelated to core operating performance.
A reconciliation of our GAAP gross profit and gross margin, the most directly comparable GAAP financial measure, to non-GAAPgross profitand non-GAAP gross margin is presented below:
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
|
(in thousands, except percentages)
|
|||||||||||||||||||||||
| GAAP gross profit | $ | 175,812 | $ | 87,877 | $ | 440,786 | $ | 198,251 | |||||||||||||||
|
Stock-based compensation expense upon IPO (1)
|
- | - | - | 516 | |||||||||||||||||||
|
Stock-based compensation expense
|
379 | 102 | 694 | 198 | |||||||||||||||||||
| Non-GAAP gross profit | $ | 176,191 | $ | 87,979 | $ | 441,480 | $ | 198,965 | |||||||||||||||
|
GAAP gross margin
|
76.2 | % | 77.7 | % | 75.7 | % | 77.7 | % | |||||||||||||||
|
Stock-based compensation expense upon IPO (1)
|
- | - | - | 0.2 | |||||||||||||||||||
| Stock-based compensation expense | 0.2 | 0.1 | 0.1 | 0.1 | |||||||||||||||||||
|
Non-GAAP gross margin (2)
|
76.4 | % | 77.8 | % | 75.9 | % | 78.0 | % | |||||||||||||||
(1) Stock-based compensation expense recognized in connection with the time-based vesting and settlement of RSUs that had previously met the time-based vesting condition and for which the liquidity event vesting condition was satisfied in connection with our IPO.
(2) Total may not sum due to rounding.
Non-GAAP Operating Income and Non-GAAP Operating Margin
We define non-GAAP operating income as operatingincome (loss) presented in accordance with GAAP, adjusted to exclude stock-based compensation expenses, and employer payroll taxes related to the time-based vesting and net settlement of RSUs with a liquidity event-based vesting condition that was satisfied in connection with the IPO.We define non-GAAP operating margin as non-GAAP operating income divided by revenue. We have presented non-GAAP operatingincome and non-GAAP operating margin because we considerthem useful metrics for investors and other users of our financial information in evaluating our operating performanceas it excludes the impact of stock-based compensation expense, and employer payroll taxes related to the time-based vesting and net settlement of RSUs in connection with our IPO, a charge that can vary from period to period for reasons that are unrelated to our core operating performance. These metrics also provide investors and other users of our financial information with an additional tool to eliminate the effects of items that may vary for different companies for reasons unrelated to core operating performance.
A reconciliation of our GAAP operating income (loss) and operating margin, the most directly comparable GAAP financial measure, to non-GAAP operatingincome and non-GAAP operating margin is presented below:
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
|
(in thousands, except percentages)
|
|||||||||||||||||||||||
|
GAAP operating income(loss)
|
$ | 55,406 | $ | (8,896) | $ | 106,465 | $ | (116,210) | |||||||||||||||
|
Stock-based compensation expense upon IPO (1)
|
- | - | - | 88,873 | |||||||||||||||||||
|
Stock-based compensation expense
|
40,739 | 45,535 | 118,659 | 97,497 | |||||||||||||||||||
|
Employer payroll tax related to stock-based compensation from IPO (2)
|
- | - | - | 1,072 | |||||||||||||||||||
| Non-GAAP operating income | $ | 96,145 | $ | 36,639 | $ | 225,124 | $ | 71,232 | |||||||||||||||
|
GAAP operatingmargin
|
24.0 | % | (7.9) | % | 18.3 | % | (45.5) | % | |||||||||||||||
|
Stock-based compensation expense upon IPO (1)
|
- | - | - | 34.8 | |||||||||||||||||||
|
Stock-based compensation expense
|
17.7 | 40.3 | 20.4 | 38.2 | |||||||||||||||||||
|
Employer payroll tax related to stock-based compensation from IPO (2)
|
- | - | - | 0.4 | |||||||||||||||||||
|
Non-GAAP operating margin
|
41.7 | % | 32.4 | % | 38.7 | % | 27.9 | % | |||||||||||||||
(1) Stock-based compensation expense recognized in connection with the time-based vesting and settlement of RSUs that had previously met the time-based vesting condition and for which the liquidity event vesting condition was satisfied in connection with our IPO.
(2) Employer payroll taxes related to the time-based vesting and settlement of RSUs that had previously met the time-based vesting condition and for which the liquidity event vesting condition was satisfied in connection with our IPO.
Non-GAAP Net Income
We monitor non-GAAP net income for planning and performance measurement purposes. We define non-GAAP net income as net income (loss) presented in accordance with GAAP on our condensed consolidated statements of operations, excluding the impact of stock-based compensation expenses, employer payroll taxes related to the time-based vesting and net settlement of RSUs with a liquidity event-based vesting condition that was satisfied in connection with our IPO, and the related tax impact on the adjustments. We have presented non-GAAP net income because we believe that the exclusion of these charges allows for a more relevant comparison of our results of operations to other companies in our industry and facilitates period-to-period comparisons as it eliminates the effect of certain factors unrelated to our overall operating performance.
A reconciliation of our GAAP net income (loss), the most directly comparable GAAP financial measure, to our non-GAAP netincome is presented below:
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
|
(in thousands)
|
|||||||||||||||||||||||
|
GAAP netincome (loss)
|
$ | 91,114 | $ | (7,593) | $ | 174,152 | $ | (108,134) | |||||||||||||||
|
Stock-based compensation expense upon IPO (1)
|
- | - | - | 88,873 | |||||||||||||||||||
| Stock-based compensation expense | 40,739 | 45,535 | 118,659 | 97,497 | |||||||||||||||||||
|
Employer payroll tax related to stock-based compensation from IPO (2)
|
- | - | - | 1,072 | |||||||||||||||||||
|
Income tax effect(3)
|
(43,627) | 2,340 | (66,935) | (2,471) | |||||||||||||||||||
| Non-GAAP net income | $ | 88,226 | $ | 40,282 | $ | 225,876 | $ | 76,837 | |||||||||||||||
(1) Stock-based compensation expense recognized in connection with the time-based vesting and settlement of RSUs that had previously met the time-based vesting condition and for which the liquidity event vesting condition was satisfied in connection with our IPO.
(2) Employer payroll taxes related to the time-based vesting and settlement of RSUs that had previously met the time-based vesting condition and for which the liquidity event vesting condition was satisfied in connection with our IPO.
(3) Income tax effect is calculated based on the tax laws in the jurisdictions in which we operate and is calculated to exclude the impact of stock-based compensation expense and one-off discrete tax adjustments that are unrelated to our core operating performance. We no longer maintain valuation allowance for non-GAAP purposes due to our profitability on a non-GAAP basis. For the three months ended September 30, 2025 and 2024, the non-GAAP tax rate was approximately 18% and 15%, respectively. For the nine months ended September 30, 2025 and 2024, the non-GAAP tax rate was approximately 12% and 19%, respectively.
Liquidity and Capital Resources
Since our inception, we have financed our operations primarily through proceeds from equity issuances including net proceeds from our IPO, and cash generated from the sale of our products. As of September 30, 2025, our principal sources of liquidity were cash, cash equivalents, and marketable securities of $1,134.4 million. Our principal use of cash isto fund our operations, invest in research and development, fund production equipment capital expenditures, and to support our overall growth.
While we have generated $224.0 millionin cash flow from operating activities for the nine months ended September 30, 2025, in prior years we generated significant losses from operations and negative cash flows from operating activitiesas reflected in our accumulated deficit of $34.6 million as of September 30, 2025. We believe that our current cash, cash equivalents, and marketable securities will be sufficient to fund our operations for at least the next 12 months and beyond. Our future capital requirements, however, will depend on many factors, including our growth rate, the timing and extent of our sales and marketing and research and development expenditures, capital expenditures for production equipment, the continuing market acceptance of our products, and the use of cash to fund potential mergers or acquisitions. In the event that additional financing is required from outside sources, we may seek to raise additional funds through equity, equity-linked arrangements, and debt. If we are unable to raise additional capital when desired and at reasonable rates, our business, results of operations, and financial condition could be adversely affected.
Cash Flows
The following table summarizes our cash flows for the periods presented:
|
Nine Months Ended September 30, |
|||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||
|
(in thousands)
|
|||||||||||||||||
| Net cash provided by operating activities | $ | 224,041 | $ | 96,973 | $ | 127,068 | |||||||||||
| Net cash used in investing activities | $ | (168,678) | $ | (666,141) | $ | 497,463 | |||||||||||
| Net cash provided by financing activities | $ | 6,075 | $ | 650,187 | $ | (644,112) | |||||||||||
Change in Cash Flows from Operating Activities
Net cash provided by operating activities for the ninemonths ended September 30, 2025 was $224.0 million,compared to $97.0 million for the comparable period in 2024. The $127.1 million increase in operating cash inflows was a result of a $282.3 million increase in net income, partially offset by both unfavorable change of $90.9 million from changes in operating assets and liabilities and lower non-cash charges of $64.4 million, primarily due to a $67.7 million decrease in stock-based compensation expense, partially offset by increased warrants contra revenue of $3.1 million. The $90.9 million of unfavorable changes in operating assets and liabilities was predominantly attributable to (i) a $51.8 million increase in the changes of the prepaid expenses and other assets primarily due to a higher income tax receivable from excess of tax benefits related to equity compensation and prepayment for a research and development vendor, (ii) a $44.5 million in unfavorable changes in accounts payables and accrued other liabilities primarily due to the timing of payments, and (iii) a $5.8 million increase in inventory primarily due to build up for anticipated demand. These unfavorable changes were partially offset by favorable changes of $13.0 million in accounts receivable due to higher product sales and the timing of customer payments.
Change in Cash Flows from Investing Activities
Net cash used in investing activities for the ninemonths ended September 30, 2025 was $168.7 million,compared to $666.1 million for the comparable period in 2024. The $497.5 million decrease in cash used in investing activities was primarily due to a $437.5 million increase in proceeds from sales and maturities of marketable securities, and a $60.5 million decrease in purchases of marketable securities.
Change in Cash Flows from Financing Activities
Net cash provided by financing activities for the ninemonths ended September 30, 2025 was $6.1 million,compared to $650.2 million for the comparable period in 2024. The $644.1 million decrease in cash provided by financing activities was primarily due to a decrease of $667.4 million related to proceeds received from the IPO net of underwriting discounts and commissions and deferred offering costs, partially offset by a $20.1 million increase in tax withholding related to net share settlement of RSUs.
Material Cash Requirements
Operating lease commitments. Our operating lease commitments primarily include corporate offices. For additional discussion of our operating lease commitments, see Note 6 in the notes to the unaudited condensed consolidated financial statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Purchase commitments. Our purchase commitments are primarily related to software licenses, cloud hosting services, or performance of certain services. For additional discussion of our purchase commitments, see Note 7 in the notes to the unaudited condensed consolidated financial statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q.
For additional discussion of our Material Cash Requirements, see Note 7 in the notes to the unaudited condensed consolidated financial statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Indemnification Agreements
See Note 7 in the notes to the unaudited condensed consolidated financial statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Critical Accounting Estimates
Our unaudited condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q are prepared in accordance with GAAP. The preparation of unaudited condensed consolidated financial statements in accordance with GAAP requires us to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and the related disclosures as of the date of the financial statements, as well as the reported amounts of revenue and expenses during the period presented. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from our estimates. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows could be affected.
There have been no material changes to our critical accounting policies and estimates as described in our Annual Report on Form 10-K for the year ended December 31, 2024.
Recent Accounting Pronouncements
For more information, see Note 1in the notes to theunaudited condensed consolidatedfinancialstatements set forth in Part I, Item 1 ofthis Quarterly Report on Form 10-Q.
Astera Labs Inc published this content on November 05, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 05, 2025 at 11:01 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]